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SEC, Gemini Request Two-Month Pause in Lawsuit as 'Potential Resolution' in the Works
The Securities and Exchange Commission sued Gemini in 2023 over its now-defunct Earn product.
What to know:
- The SEC and Gemini requested a 60-day pause in their lawsuit to explore a potential resolution.
- Gemini was sued by the SEC in January 2023 for allegedly offering unregistered securities through its Earn product.
- Genesis Global Capital, also sued by the SEC, settled for $21 million in March 2024, resolving its involvement in the case.
A potential resolution could be coming soon in the long-running lawsuit between the U.S. Securities and Exchange Commission (SEC) and Gemini over the crypto company's Earn product.
STORY CONTINUES BELOW
The two submitted a joint request to the U.S. District Court for the Southern District of New York on Tuesday to consider a 60-day pause in the case as they consider a potential resolution.
The motion mirrors similar stay requests filed by the SEC in other crypto-related cases, including its cases against Binance and Tron, both of which were granted by the court. The regulator also filed a similar motion in its case against Coinbase before later dropping the suit entirely.
The SEC filed suit against Gemini and bankrupt crypto lender Genesis in January 2023, alleging that both companies had violated securities laws through the Gemini Earn program. Through the Earn program, retail investors were promised as much as 8% interest — paid by Genesis — on tokens invested through the program.
When Genesis halted withdrawals in the wake of FTX’s November 2022 collapse, approximately $900 million in user funds were trapped on the platform, according to the SEC’s initial complaint. A public dispute between the two companies’ leadership followed, and by Jan. 10, 2023, Gemini shuttered the Earn program. Two days later, the SEC filed charges against both companies. That same month, Genesis filed for bankruptcy. In February 2024, Genesis paid the SEC a $21 million fine to settle the charges against it.
A separate SEC probe into Gemini was closed in February.
Read more: SEC Drops Probe into Gemini, Cameron Winklevoss Demands Recompense
Both the paused litigation and the dropped probe into Gemini are part of the SEC’s ongoing retreat from former Chair Gary Gensler’s so-called “regulation by enforcement” approach to crypto regulation. Under the leadership of Acting Chair Mark Uyeda, the agency has dropped a host of enforcement cases, including against Ripple and Cumberland DRW, and closed even more investigations into companies including Yuga Labs, OpenSea, and Uniswap Labs.
Read more: Where All The SEC Cases Are
Sam Reynolds
Sam Reynolds is a senior reporter based in Asia. Sam was part of the CoinDesk team that won the 2023 Gerald Loeb award in the breaking news category for coverage of FTX's collapse. Prior to CoinDesk, he was a reporter with Blockworks and a semiconductor analyst with IDC.
Cheyenne Ligon
On the news team at CoinDesk, Cheyenne focuses on crypto regulation and crime. Cheyenne is originally from Houston, Texas. She studied political science at Tulane University in Louisiana. In December 2021, she graduated from CUNY's Craig Newmark Graduate School of Journalism, where she focused on business and economics reporting. She has no significant crypto holdings.
